Gindalbie Metals (GBG)

UBS has reiterated its “buy" rating for
Gindalbie Metals
with a price target of $1.20 after the company beat the broker’s expectations to report a net profit of $13.5 million.

Elevated costs from the less efficient logistics chain under the short-term agreement with Midwest has impacted the broker’s fiscal 2012 estimates, with earnings forecasts reduced 10 per cent, but the large-scale magnetite shipments set to begin in mid-2012 should drive significant earnings.

The broker says with the funding of Karara now largely “de-risked", the market is likely to begin to focus on first concentrate shipments in mid-2012 into a tight iron ore market and strong forecast cash flow. UBS believes the key catalysts for the stock in the next 12 months include the finalisation of the debt funding for the Karara project and first concentrate production.